global targets local benefitseascongress.pemsea.org/.../proceedings-roundtable...to develop models...
TRANSCRIPT
16-21 November 2015
Setting the Sustainable Development Agenda for the Seas of East Asia beyond 2015
Global TargetsLocal Benefits
Roundtable: Investing in a Blue Economy for Conservation and Impact
Special Event
EASCongress/WP/2015/12
1
The East Asian Seas Congress 2015
“Global Targets, Local Benefits:
Setting the Sustainable Development Agenda for the Seas of East Asia beyond 2015”
Da Nang, Viet Nam, 16‐21 November 2015
Special Event
Roundtable: Investing in a Blue Economy for Conservation and Impact
18 November 2015
Convening Agencies
Partnerships in Environmental Management for the Seas of East Asia (PEMSEA)
Global Environment Facility
United Nations Development Programme
The World Bank
Workshop Chair:
Mr. Leonardo Paat
Senior Environment Specialist
The World Bank
1. INTRODUCTION
1.1. The 5th EAS Congress, with the theme, “Global Targets, Local Benefits: Setting the Sustainable
Development Agenda for the Seas of East Asia beyond 2015,” was delivered through three primary
sessions exploring various aspects of sustainable development of coastal and marine resources. These
sessions were complemented by a set of special workshops throughout the week, including a roundtable
exploring the theme of Investing in a Blue Economy for Conservation and Impact.
1.2. Welcome remarks and an introduction for the roundtable were delivered by the Chair, Mr. Leonardo
Paat, Senior Environment Specialist, The World Bank. Mr. Paat highlighted the unique opportunity that
the roundtable afforded to bring together members of the investment community and others working
to develop models and approaches for scaling up sustainable development of shared coasts and oceans.
He shared that available funds devoted to protecting ecosystems and biodiversity overall remain short,
with a gap anywhere from US$ 300 billion per year to possibly trillions of US dollars. More investment is
needed to protect and enhance critical coastal and marine ecosystems while contributing to sustainable
development. There is no shortage of investment capital available, but significant challenges exist in
developing projects and enterprises in the coastal and marine environment that are suitable for
investment and align with investor expectations. He expressed that The World Bank is proud to be
partnering with PEMSEA, as part of the project Applying Knowledge Management to Scale up
Partnership Investments for Sustainable Development of Large Marine Ecosystems of East Asia and Their
2
Coasts, to build a regional knowledge management platform to help scale up investments. He concluded
by encouraging participants to get involved and provide their feedback on the platform to help build a
vibrant, sustainable coastal and marine investment pipeline in the region.
1.3. Mr. Ryan Whisnant, Head of Professional Services, PEMSEA, provided background on PEMSEA including
the importance of integrated coastal management (ICM) and the Sustainable Development Strategy for
the Seas of East Asia (SDS‐SEA) in the region. He explained PEMSEA’s role leading the three‐year World
Bank project introduced by Mr. Paat and the work developing an online platform and related services to
help facilitate investment in projects and enterprises that fall under ICM, or “blue economy”, a concept
that’s gaining more and more interest in the region. He then shared the objectives of the roundtable:
a. Understand the current ICM investment landscape in East Asia;
b. Learn about various models for investment in sustainable development of coasts and oceans;
c. Learn about examples of potentially investable activities emerging from World Bank projects;
d. Demonstrate features and gather feedback on beta design of investment functionality in the
online platform; and
e. Connect project managers, local government representatives and investment experts.
1.4. Mr. Whisnant shared PEMSEA’s partnership with Impact Investment Shujog, a Singapore‐based impact
enterprise and impact investing advisory firm, to develop a report exploring the current financial funding
flows to ICM‐related sectors in East Asia, officially launched at the Congress and available at
http://www.pemsea.org/our‐work/blue‐economy.
1.5. Prof. Durreen Shahnaz, Founder, Impact Investment Exchange (IIX) Asia and Shujog, delivered a keynote
presentation on the findings of the report. Ms. Shahnaz shared that the economy in Asia is thriving, with
the 3.4 million high net‐worth individuals (worth over US$100 million). Despite this wealth, over a billion
people still live on less than US$2/day. We also see impacts of coastal economic growth, including
overfishing, disappearance of coral reefs, marine pollution, etc. The report identifies only US$10 billion
of investment into sustainable development of coasts and oceans in the region. This amount is not
enough, and the need to change this narrative is urgent. More stakeholders must be involved than just
the typical donor agencies. There must be a push for more innovative financing mechanisms, such as
green bonds, debt‐for‐nature swaps and biodiversity offsets. We need to go beyond typical public‐
private partnership (PPP), ESG and corporate social responsibility (CSR) approaches. In this context,
there has been an increased interest in impact investing, which considers social and environmental
impact in investments. IIX and Shujog work to create social capital markets and better quantify the
impacts of these investments, bringing investment language to development work and vice versa. These
types of investment are needed to generate true financial sustainability of development work, beyond
the life of a grant. Projects/enterprises must have the right structure, technical capabilities, etc., to bring
in investors. Ms. Shahnaz concluded by suggesting that Asia is ready, and we can make SDG 14 a reality
by tapping into the US$1 trillion ready to be invested by 2020.
3
2. MODELS IN MARINE SUSTAINABLE DEVELOPMENT
2.1. Following the keynote, a panel of investment experts was invited to share various models and
approaches to investing in coastal and marine resources.
2.2. Mr. Kent Strauss, Manager, Fisheries Research and Innovation, Environmental Defense Fund, presented
strategic financing and investment models to achieve sustainable marine fisheries. Mr. Strauss shared
EDF’s work on models to recover fisheries while creating both financial and social return, and the
important role that private capital can play in projects in creating financial viability and accountability.
There are significant threats to fisheries, but according to EDF’s models, with the right management
approach fisheries can recover in a relatively short amount of time, with substantial upside in the
region: 20% more fish in the water, harvest increase by 14% and US$16 billion more profits. The cost of
fishery management (e.g., enforcement, admin services) is far lower than the benefits, by a ratio of 10:1.
Fishery transition projects should be launched with financial considerations in mind, following a
framework and structuring investments to enable increased value and capture of financial returns. We
need to look at different sources of capital and match activities that are suitable for the funding source.
Individual projects (e.g., individual fisheries) can be highly risky but aggregating projects together can
help to diversify risk.
2.3. Ms. Justine Leigh‐Bell, Standards Manager, Climate Bonds Initiative, made a presentation on green
bonds and the potential for investment in marine assets. Ms. Leigh‐Bell started by emphasizing the
potential for directing finance towards positive impact through bonds and the need for rapid change to
address low‐carbon technology (e.g., low‐carbon transport, renewable energy) and climate resilience
simultaneously. Trillions of dollars of investment will be required and should be thought of as
investment, not cost. There’s no shortage of capital, but the challenge is directing it to the right projects.
They are expecting to see at least US$35 billion in issuance of green/climate bonds by the end of 2015,
some corporate, like Unilever. Investors need to understand that they don’t take a performance hit by
choosing a “green” product. Key benefits to the issuer of such products include investor diversification
and reputational benefit. There is a need to ensure robust due diligence. Monitoring and transparency
and annual reporting by the issuer on impacts and management of proceeds are critical for engaging
investors. The Climate Bonds Initiative has a Climate Bond Standard and Certification Scheme to help
scale the use of these types of bond products. Renewable energy is currently the heaviest focus, but
they are seeing growing interest in transport and water. There are emerging opportunities in marine
sectors including port infrastructure, sustainable seafood and waste management.
2.4. Mr. Trip O’Shea, Vice President, Encourage Capital, presented what the firm has learned as part of the
Vibrant Oceans Initiative in preparing investment blueprints for transitioning to sustainable fisheries.
Mr. O’Shea described government failure in providing public fisheries infrastructure due to funding
constraints and political barriers, and the important role of private capital. Misaligned economic
incentives, inadequate data management and a lack of transparency also contribute to persistent
challenges with illegal, unreported and unregulated fishing. But based on historical data, when
interventions take place, fisheries can rebound quickly. A public‐private partnership (PPP) approach can
4
be applied to fisheries, where investment in distressed fisheries can result in financial upside tied to
fishery recovery. In this scenario, the private sector commits up‐front capital and assumes
implementation and operating risks. As with any investment, early stage is higher risk. Encourage Capital
is developing a PPP initiative in the Philippines targeting at least US$20 million revenue generation
through user fees along with tangible social and environmental benefits. Specifically, the initiative
targets the port of General Santos City where there is an undervaluation of the tuna catch due in part to
lack of catch data monitoring. Investments in port infrastructure upgrades, market operations and
export linkages should improve the performance of the fishery. Common barriers to such investment
include a financing gap in early stages of project development, lack of investible projects, difficulty in
monetizing social/environmental benefits, difficulty in finding good local partners and a lack of
investment track record.
2.5. Panel discussion. Following the presentations, Mr. Duncan Leadbitter, Director, Fish Matter, moderated
a panel discussion including questions from the audience.
2.5.1. Ms. Carrie Anne Cadman from World Bank Indonesia emphasized that tangible impact and change
happen at the national level, and without policy reform and an integrated vision, real change will
be difficult. She posed a question to the panelists about the right level and timeframe for
approaching these types of investments, noting that Indonesia has 15 years to “get it right” or else
it will get “stuck” based on demographic and economic forces. The panel responded that we must
take global models and engage national governments to influence policy.
2.5.2. Comments from the audience also highlighted the important impact of government failure and a
lack of willingness among governments to try new things. The panel responded that there is
indeed a need for national support for viable, long‐term projects. Governments need to cooperate
and work with communities.
2.5.3. Responding to a question from the moderator about mobilizing the interest (and wealth) of
people in the region towards fisheries, Ms. Shahnaz suggested that we need a knowledge base
and platforms for private capital to come in. We need to ask ourselves what we can do today that
will allow for organizations to be investment‐ready. In particular, how can we help get SMEs off
the ground. There is strong demand from the investor side, but projects need to be investment‐
ready and investors need to know that they will see returns.
2.5.4. We need to catalyze this space so that the private sector can come in. But donor agencies can
sometimes spoil the market. It’s critical to regularly reassess a donor’s role, and whether it’s time
to step back.
2.5.5. Responding to an audience question, Mr. Strauss discussed the importance in EDF’s work of
gaining scientific capacity by tapping universities and scientists, for example, in their fisheries
work in Indonesia.
5
2.5.6. Ms. Leigh‐Bell suggested that fisheries fall under investment in resilience and fisheries is a key
area in developing standards work. More work is needed to be able to quantify the payback and
meet the needs of investors.
2.5.7. The World Bank commented on the value of the new ICM investment report and suggested that
government financing could be included in future research since the vast majority of blue
economy financing come from governments. She added that the challenge in the blue economy
space is monetization of benefits.
2.5.8. The panel concluded with Mr. O’Shea emphasizing that management of fisheries can be a tricky
political issue (e.g., setting quotas). Ms. Shahnaz added that government can come in as a
guarantor to help facilitate investments. Mr. Strauss suggested that we look at the tools we have,
identify the gaps and bring these to the fisheries world.
3. EMERGING INVESTMENT OPPORTUNITIES IN SUSTAINABLE COASTAL DEVELOPMENT
3.1. Building on the discussion on investment models and approaches, a second panel delivered
presentations on examples of emerging investment opportunities in sustainable coastal and marine
development.
3.2. Ms. Nguyen Thi Thu Hong presented on behalf of Ms. Le Thi Kim Phuong, Head of the Foreign Economic
Relations Division, Da Nang Department of Planning and Investment, Viet Nam. The presentation
featured four investment proposals related to marine pollution management infrastructure in Da Nang.
The first proposal involved investment in a sanitary landfill/energy conversion system using a PPP
scheme. The second proposal covered upgrading infrastructure and capacity building for a municipal
solid waste management system. The third proposal covered a sludge treatment facility, with current
facilities outdated and incompatible with the growth demands of Da Nang. The fourth proposal focused
on a wastewater treatment plant in the Hoa Khahn industrial zone, where the investment would be paid
off over time through the water tariff. This was met with resistance in the community because it would
mean increased water costs. The presentation concluded with a call for support for the proposals and
investments in further project feasibility studies and implementation.
3.3. Mr. Arnel V. de Mesa, National Deputy Director of the World Bank‐funded Philippine Rural
Development Project (PRDP) presented the project’s work and specific initiatives focused on
seaweed Farming in Guimaras Province, Philippines. PRDP’s primary objective is to increase the
income of farmers and fishers by at least 5% annually while simultaneously conserving the
environment. Under the project, provinces identify priority commodities with comparative
advantage, and together with local government, they jointly develop business plans. The
project utilizes PhP27.5 billion (approx. US$572 million) in total loans, including money from
national and local governments. Related to marine work, technology including geo‐tagging and
underwater cameras are applied to marine protected areas (MPAs). Programs include capacity
6
building and training assistance to fishers and construction of road networks connecting fishers
and seaweed farmers to the market. The Philippines ranks third in the world in seaweed
exports, and seaweeds were identified as an important commodity for PRDP, with the benefit
of alternative livelihood that can reduce fishing pressure in MPAs. A PhP837,000 (approx.
US$17,000) investment proposal was developed for the municipality of Nueva Valencia for
development of seaweed farming, targeting a 20% return.
3.4. Following an introduction to the World Bank‐funded Philippines Climate Change Adaptation Project
(PhilCCAP) by Mr. Conrad Bravante of the Foreign Assisted and Special Projects Office of the Philippines
Department of Environment and Natural Resources, Mr. Rene Benguerel, Founder, Blueyou Consulting
presented lessons in coastal community business models and sustainable private sector enterprise,
based on experiences from the PhilCAPP project. Mr. Benguerel shared work that Blueyou conducted in
assessing the feasibility of creating a sustainable, community‐based abalone enterprise on Siargao
Island, Surigao Del Norte, Philippines. Blueyou assessed a vertically integrated enterprise, including
seaweed farming, hatchery, ranching, processing, and marketing. Currently, there are no examples of
purely commercial abalone production operations in the Philippines. The assessment found that
significant scale is needed before seeing adequate profitability (700,000 juveniles a year), a scale that is
difficult to support in a remote area such as Siargao. An additional challenge is the seaweed required to
feed the abalone in the grow‐out phase of production (600‐650 tons of seaweed), where it may make
more economic sense to simply farm and sell the seaweed. Overall, the full operation is not a feasible
investment. However, Blueyou suggested a phased approach beginning with seaweed farming and
potentially phasing in abalone in pilot and scale‐up phases, depending on future market conditions for
abalone. Mr. Benguerel concluded with overall principles for developing such community‐based
enterprises, including the importance of aligning projects with a community’s capacity and capabilities
and the impact of investing early on in data management, feasibility studies, value chain analysis and
risk analysis.
3.5. The final speaker of the day was Dr. Mark Milstein, Professor of Management and Director of the
Center for Sustainable Global Enterprise at Cornell University. Dr. Milstein presented the approach to
ecologically‐informed business models being developed to support marine services and alternative
livelihoods as part of the World Bank‐funded Capturing Coral Reef and Related Ecosystem Services
(CCRES) Project. The presentation highlighted the need for a multidisciplinary approach to address the
complexities in marine investment, including marine sciences, systems dynamics, management science
and behavior change. CCRES is developing tools for decisionmaking at pilot sites that could be useful for
local governments, NGOs and development organizations. While ecosystem valuation is important,
valuations don’t ultimately prevent ecosystems destruction — local market dynamics really drive
individual behavior as it relates to use of resources. The social/environmental mission must be aligned
with a business objective to transform the economics of a destructive activity. In the example of
mangrove charcoal, it’s critical to segment the market and understand who is using mangrove charcoal
and why, and what the long‐term needs are. Will alternative raw materials be there to support the
change, or will the burden shift to another resource (e.g., the upland forest)? These types of blue
economy activities open opportunities for innovations and require sufficient rigor in problem solving.
7
3.6. Panel discussion. Following the presentations, an open discussion was conducted. Highlights from the
discussion included the following:
3.6.1. There is a need for more detailed analysis of investments to convince investors of the value —not
just in the social and environmental impacts but also financial returns. In the case of the Philippine
Investment Board, proposals don’t get past the first stage based only on social and environmental
justifications.
3.6.2. In transitioning to alternatives (as in the case of mangrove charcoal), it is difficult to ask people to
pay for things they previously got for free. Systemic poverty is a huge hurdle. Ask, “what’s the
alternative to those below the poverty line?” It is useful to differentiate poverty‐reduction,
community‐based activities from profit‐driven commercial enterprises, as they require different
approaches. Not all social projects will be independently financially sustainable, and that’s OK. But
for community‐based enterprises, value chain analysis should be applied to prove that individuals
will benefit from the project. Any of these initiatives should have measurable impact.
3.6.3. Systems modeling should play a role. How might a proposed business impact other areas (e.g.,
social, cultural, political or environmental)?
3.6.4. What is the best way to leverage the role of government? Ideal scenario is to get better support
from the government authorities for blue economy development, with an awareness in the
government about the enterprise objectives. A lot of transformative work is needed here. Be
honest with yourself about who has what role among multiple stakeholders.
4. SEAS OF EAST ASIA KNOWLEDGE BANK
4.1. Mr. Whisnant from PEMSEA provided an overview of the new Seas of East Asia Knowledge Bank
(SEAKnowledgebank.net) as an online platform for helping to facilitate investment in projects and
enterprises supporting sustainable development of coastal and marine areas. He walked the audience
through the live beta functionality in the online platform and called for input and feedback.
4.2. Participants provided overall positive feedback on the platform and suggested further testing with
investors. The platform was viewed as offering many potential opportunities, and specific suggestions
were offered included linking the platform to crowdfunding and angel investors. The platform and its
associated services could be useful as a resource to help guide projects and enterprises as they problem
solve. For example, as the platform evolves, it could offer locally relevant information needed to
develop investments like permitting and licensing, offering more transparency and shortening process
time.
8
4.3. Participants agreed that the terminology (e.g., “project” vs. “investment”) is important and should be
refined. The terminology used must resonate with both investors and those developing the investments.
The question was also raised: How do people find the platform? Where does the engagement start?
Remember that people will come to the platform with different intentions, levels of understanding, etc.
It is helpful to ask, “what stage of development are you in (e.g., seeking help, developed but not
investment‐ready, investment‐ready, etc.)?”
5. CONCLUSIONS AND RECOMMENDATIONS
5.1. Overall, the roundtable concluded that scaling up investment in ICM‐related sectors will be critical for
achieving sustainable development goals for oceans and coasts in the region. Investors recognize the
potential in sustainable coastal and marine investments, but it is a nascent investment class with risks
and requires further development of viable models. Government plays a key role in providing proper
governance and establishing an enabling environment for investment in the region. There is no shortage
of investment capital, but expectations must be aligned with investor requirements and more work is
needed to prepare projects for investment. Help from experts and funding is needed to move projects
from concept to feasibility. The Seas of East Asia Knowledge Bank can be a useful tool as an initial step
for project developers and local governments to build an understanding of how to develop investments.
More research is needed to understand ICM investments in the region and identify barriers and
opportunities for addressing them. A good pipeline of quality investment projects would be an asset for
a certain class of investors looking for opportunities in the region. Investment is complex, and an online
platform can only do so much. Meetings, forums and other in‐person services must be built around the
platform to facilitate real investment.
5.2. Recommendations. The roundtable generated the following recommendations:
5.2.1. Further test the platform with investors and project developers, for example, by engaging with
other World Bank‐funded project to pilot beta version of the platform.
5.2.2. Develop a portfolio of service providers and funding options for moving projects from concept
to feasibility, based in real business rigor as a foundation for long‐term sustainability.
5.2.3. As part of platform design, consider ways that the platform can facilitate investment in small
and medium enterprises in particular.
5.2.4. Develop in‐person meetings, forums and other services for project developers and investors to
complement the online platform.
5.2.5. Explore opportunities for supporting local governments in establishing an enabling environment
for investment.
5.2.6. Engage PEMSEA’s networks, in identifying good quality potential investment projects.
9
ANNEX 1
LIST OF RESOURCE PERSONS
Mr. Leo Paat
Senior Environment Specialist
The World Bank
Prof. Durreen Shahnaz
Founder
Impact Investment Exchange Asia / Shujog
Mr. Kent Strauss
Manager, Fisheries Research and Innovation,
Environmental Defense Fund
Ms. Justine Leigh‐Bell
Standards Manager
Climate Bonds Initiative
Mr. Trip O'Shea
Vice President
Encourage Capital
Mr. Duncan Leadbitter
Director
Fish Matter
Ms. Le Thi Kim Phuong
Chief of Foreign Economy Division,
Da Nang Department of Planning and
Investment
Mr. Arnel V. de Mesa
National Deputy Project Director,
Philippine Rural Development Project
Mr. René Benguerel
Founder & Managing Director,
BlueYou Consulting / Meliomar
Dr. Mark Milstein
Clinical Professor of Management and Director,
Center for Sustainable Global Enterprise,
Cornell University
Mr. Ryan Whisnant
Head of Professional Services
PEMSEA
Ms. Antonia Reyes
Analyst
PEMSEA
10
ANNEX 2
WORKSHOP PROGRAM
Time Activity/Presentation Speaker/Panelist
Part 1 Investing in Coasts and Oceans in East Asia
1030 – 1035 Welcome remarks and introduction from Chair Mr. Leo Paat
Senior Environment
Specialist,
The World Bank
1035 – 1045 Overview of the World Bank project Applying
Knowledge Management to Scale up Partnership
Investments for Sustainable Development of Large
Marine Ecosystems of East Asia and Their Coasts
Mr. Ryan Whisnant
Head of Professional
Services, PEMSEA
1045 – 1110 Keynote: Investment Landscape Mapping in East Asia
for ICM and Blue Economy
Prof. Durreen Shahnaz
Founder, Impact
Investment Exchange Asia
/ Shujog
1110 – 1210 Plenary: Investment models in marine sustainable
development
Strategic financing and investment models to achieve
sustainable marine fisheries
Green bonds and the potential for investment in
marine assets
The Vibrant Oceans Initiative and investment
blueprints for transition to sustainable fisheries
Mr. Kent Strauss
Manager, Fisheries
Research and Innovation,
Environmental Defense
Fund
Ms. Justine Leigh‐Bell
Standards Manager,
Climate Bonds Initiative
Mr. Trip O'Shea
Vice President, Encourage
Capital
1210 – 1230 Panel Discussion Moderator:
Mr. Duncan Leadbitter
Director, Fish Matter
11
Time Activity/Presentation Speaker/Panelist
1230 – 1400 Lunch break
Part 2 Emerging Investment Opportunities in Sustainable
Coastal Development
1400 – 1530 Marine pollution management infrastructure in
Danang, Vietnam
Seaweed farming in Guimaras Province, Philippine
Rural Development Project (PRDP)
Lessons in Coastal Community Business Models and
Sustainable Private Sector Enterprise: Abalone
production in Siargao Island, Surigao Del Norte,
Philippines Climate Change Adaptation Project
(PhilCCAP)
Developing ecologically‐informed business models to
support marine ecosystem services and alternative
livelihoods, Capturing Coral Reef & Related Ecosystem
Services (CCRES) project
Q & A
Ms. Le Thi Kim Phuong
Chief of Foreign Economy
Division, Da Nang
Department of Planning
and Investment
Mr. Arnel V. de Mesa
National Deputy Project
Director, Philippine Rural
Development Project
Mr. René Benguerel
Founder & Managing
Director,
BlueYou Consulting /
Meliomar
Dr. Mark Milstein
Clinical Professor of
Management and
Director, Center for
Sustainable Global
Enterprise, Cornell
University
1530 – 1600 Introduction to investment features in the new SEA
Knowledge Bank
Mr. Ryan Whisnant
Head of Professional
Services, PEMSEA
1600 – 1615 Coffee break
1615 – 1700
Q & A, discussion and design input for further
development of SEA Knowledge Bank investment
features
Mr. Ryan Whisnant
Head of Professional
Services, PEMSEA